Minimum Wage, Maximum Health? A Difference-in-Differences Analysis on the Health Implications of Minimum Wage Policy

Abstract

There is an ongoing and intensified debate around the federal minimum wage policy in the United States, specifically in how an increase from the $7.25 baseline enacted in 2009 would affect the labor market and broader economy. As attention on minimum wage policy sharpens, particularly with proposals like the Raise the Wage Act aiming to increase the federal minimum wage to $17 by 2028, there is an imperative need to understand the comprehensive effects on those most impacted by the policy. We aim to add to the argument through a difference-indifferences analysis, where we evaluate the difference in health outcomes of low-income workers between states who increased their minimum wage beyond the federal level and those who adhered to the federal policy. To study its effect on health, we use metrics of self-reported health and risk behavior from the Behavioral Risk Factor Surveillance System (BRFFS) between 2006-2019. We find statistically significant results that an increase in the statewide minimum wage causes negative health outcomes in self-reported health, specifically in general health status and poor physical health days. Moreover, adherence to the federal minimum wage caused an increase in physical health, with individuals in those states reporting an increase in good physical health days. Within our sub-sample analysis, males reported the most significant adverse health effects from a statewide minimum wage increase, as they reported worse general health status, worse physical health days, and a greater amount of days their health limited daily functioning. Within states who conformed to the federal minimum wage, non-white individuals reported the strongest boost in health from the wage policy, as they reported better physical health days. Among whites, males, and females, there is a decline in general health status when a statewide minimum wage increase occurs. Across both groups and all demographic and socioeconomic controls, aside from lower income, there is a general decrease in smoking participation, suggesting there is a general trend across the United States to decrease smoking. These findings suggest further research is needed to implement economic legislation beyond the minimum wage policy to encourage health equity among low-income workers.